Medicare Advantage shrugs off cuts

The Obama administration is declaring a small victory on Medicare: The private Medicare Advantage plans haven’t been hurt by “Obamacare” after all.

In fact, they’re thriving, according to administration estimates released Wednesday.

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Centers for Medicare & Medicaid Services is projecting that Medicare Advantage rolls will have grown by 28 percent over three years by 2013 while premiums will have dropped by 10 percent and benefits have held steady.

And that’s despite estimates by the Congressional Budget Office that the program would shrink because of reductions in payments under the Affordable Care Act, Jon Blum, director of the CMS Center for Medicare, said in a conference call with reporters Wednesday.

“Those projections haven’t been true,” he said.

Under the ACA, benchmark payments to Medicare Advantage plans were frozen in 2011 and began to be reduced this year relative to the cost of the fee for service.

And in 2014, the plans will be required to spend 85 percent of their premiums on medical care.

But Blum said the sustained interest from insurers that CMS was seeing for 2013 suggested that the program would remain strong.

“Plans don’t usually make strong commitments in one year just to pull out the next,” he said.

Republicans, however, say it’s too early to say Medicare Advantage is safe.

Senate Finance Committee Republicans blasted out a release highlighting reports that only 4 percent of the savings the ACA is supposed to wring from the Medicare Advantage program have taken effect. They also noted that the Government Accountability Office has questioned the legality of an $8 billion program to boost payments to Medicare Advantage plans that win high quality marks from CMS starting this year.

Republicans, including Sen. Orrin Hatch of Utah, have said the program is designed to shield the plans from cuts until after the election.

In 2013, the average premium is expected to increase by $1.47 to $32.59, but that’s down from $36.14 in 2010, according to CMS. And the agency projects the number of Medicare Advantage plans available to beneficiaries will increase by 7 percent in 2013.

During the open enrollment season this fall, Medicare beneficiaries will be notified for the first time if they are enrolled in a chronically poorly performing plan (one that receives fewer than three stars from CMS) and they won’t be allowed to automatically re-enroll through the CMS website, Blum said.

The new star ratings are expected to be released as soon as next week.